Drastic job cuts coming to German auto industry, expert warns

Munich (dpa) – The German automotive sector is threatened with the loss of more than 100,000 jobs due to the coronavirus pandemic, a leading expert on the industry has warned.

In the view of Ferdinand Dudenhoeffer, demand is set to slump by 15 per cent this year. According to the experience gained from the last global financial crisis, it will take more than a decade to fully make up that lost ground.

Dudenhoeffer, who heads the Centre of Automotive Research at the University of Duisburg-Essen, calculates there will be an overcapacity of between 1.3 million to 1.7 million vehicles in German factories.

This unused production capacity will contribute to the job losses, he wrote in a paper seen by dpa, despite the German government’s new reduced hours work scheme that sees the state help pay for employees’ reduced salaries.

Dudenhoeffer put the number of jobs at risk at car manufacturers and suppliers between 100,000 to up to 830,000.

Last year, car production in Germany fell from 5.1 to 4.7 million vehicles. This year, the researcher expects a drop in sales of 15 per cent in Germany, 20 per cent in China, 25 per cent in France and the the United States, and 30 percent in Italy.

This means that production in Germany “is likely to shrink to 3.8 million vehicles, according to an optimistic forecast. Under a pessimistic scenario, we expect only 3.4 million vehicles.”

“The reason is not problems in the supply chains, but quite clearly the lack of demand,” Dudenhoeffer writes, describing the industry as suffering from “a serious, long-term demand problem” that has been exacerbated by the pandemic.